Continue reading "Are you experiential? Future-casting for retail betting…"
Share Winning Post: Swedish regulator pushes back on ‘Storebror’ approach to deposit limits August 24, 2020 Related Articles StumbleUpon Betfred counters Oppenheimer bid in race to rescue Phumelela August 26, 2020 SBC Magazine Issue 10: Kaizen Gaming rebrand and focus for William Hill CEO August 25, 2020 Scott LongleyThe major high-street bookmakers are facing up to the challenge of how to re-invent retail betting in the face of increasing channel shift and the potential fall of machine revenues….____________________As benefits the current limbo afflicting the UK betting shop sector, the first-quarter trading statements from Ladbrokes Coral and William Hill presented a mixed picture of the health of land-based sports betting.While there is some respite from speculation over the triennial review – at least until after the UK’s general election – we have the evidence from two of the big three that over-the-counter (OTC) betting is currently a tough business.Ladbrokes Coral said last week that OTC staking amounts had fallen 7 percent in the first three months of the year, though after applying an improved margin performance the net revenue figure was down 5 percent.That factor was reversed at William Hill where a 2 percent rise on stakes failed to translate into a rise in OTC net revenue with a 0.8 percentage point fall in gross margins estimated to have translated into a 2.5 percent fall in gross win.With the sights of the Department of Culture, Media and Sport’s review trained on the maximum stake on gaming machines, it will therefore come as cold comfort for William Hill that its retail business enjoyed a 1 percent rise in total retail net revenue off the back of its machine performance. Still, it is a healthier state of affairs than at its rival where even a positive machine result couldn’t do more than bring retail net revenues overall year-on-year decline of 2 percent.Given the far-from-clear backdrop, it is no wonder that, as H2 Gambling Capital analyst Ed Birkin said last week at the SBC Betting on Football conference, it is hard to see whether the operators know the best course of action on future retail strategy. Although there will be a presumed hit to earnings from whatever comes out of the review, the shared costs across the various shop estates would in many cases be the only reason why a shop might be tipped into unprofitability.“Keeping them open won’t be as expensive as it sounds,” he told the audience at Stamford Bridge. “Over 50 percent of Coral’s sportsbook is now from omni-channel customers. They estimate the (cost per acquisition) at £20, which is what they pay their staff to sign them up.”In this scenario, Ladbrokes Coral and William Hill (but less so Betfred) might be tempted to run their shops as loss-leaders to share central costs and use them as an advertising tool for the online business, particularly given the likelihood that the review will also impose new restrictions on gambling TV advertising.Speaking on the same panel, Simon Davies, analyst at Canaccord Genuity, similarly suggested the more pessimistic prognostications for retail betting-shop closures were likely overdone, regardless of what the review comes up with.“It’s easy to forget given all the doom and gloom around these retail businesses that they are still pretty large businesses,” he said. Though a £2m maximum stake on gaming machines in betting shops would dent the profitability of many shops, the omni-channel opportunity provides a significant competitive advantage for the existing retail operators.“It is a substantial reduction to their customer acquisition costs relative to pure online, so as long as there is a rational response from the DCMS on maximum stakes there is no reason retail estates won’t continue, albeit with a shrinkage over the next decade,” he said.Still, there are voices warning that the channel shift to online with regard to sports betting will eventually limit the extent to which omni-channel can provide a retail safety net. Paul Leyland, analyst at Regulus Partners, points out that over the last decade OTC has declined circa £450m while online sports-betting has gained £1.3bn in what he terms as an “aggressive” shift.“Given the (relatively) gradual nature of this change, the amount of short-term noise in the data, the extent to which FOBTs have plugged the gap and the different operators who have benefited versus lost out, the nature of this shift is often lost on both operators and commentators,” he said. “Nevertheless, the shift is real and profound.”As Leyland points out, this mirrors other sectors where the rise of mobile as a transactional tool is driving online retail sales growth in the UK at a pace of 20 percent a year. But betting is one of the most ‘shifted’ consumer services and even with omni-channel, the challenge remains one of maintaining profitability against lower-cost online operations.To counter a trend which will be exacerbated by regulatory interventions, Regulus Partners suggest the high-street bookmakers will need to consider how to enhance the “experiential” element of retail betting.“Of course, the number of betting shops required to provide such services could be materially fewer than today, but then the remaining betting shops can be focused more on being sports-betting and brand beacons rather than a half-way house between small arcade and high street casino, with betting an increasingly anachronistic or outsourced minority product._____________________________Article written by Scott Longley – Clear Concise Media Submit Share